Wheat Sep '21 (ZWU21)
|Contract||Chicago Soft Red Winter Wheat|
|Tick Size||1/4 cent per bushel ($12.50 per contract)|
|Daily Limit||45 cents per bushel ($2,500 per contract) Expanded limit 70 cents|
|Contract Size||5,000 bushels|
|Months||Mar, May, Jul, Sep, Dec (H, K, N, U, Z)|
|Trading Hours||7:00p.m. - 7:45a.m. and 8:30a.m. - 1:20p.m. (Settles 1:15p.m.) (Sun-Fri) CST|
|Value of One Futures Unit||$50|
|Value of One Options Unit||$50|
|Last Trading Day||The business day prior to the 15th calendar day of the contract month|
Wheat is a cereal grass. Wheat was a wild grass before humans started to cultivate it for larger-scale food production. It has been grown in temperate regions and cultivated for food since prehistoric times. Wheat is believed to have originated in southwestern Asia. Archeological research indicates that wheat was grown as a crop in the Nile Valley about 5,000 BC. Wheat is not native to the U.S. and was first grown here in 1602 near the Massachusetts coast. The common types of wheat grown in the U.S. are spring and winter wheat. Wheat planted in the spring for summer or autumn harvest is mostly red wheat. Wheat planted in the fall or winter for spring harvest is mostly white wheat. Winter wheat accounts for nearly three-fourths of total U.S. production. Wheat is used mainly for human consumption and supplies about 20% of the food calories for the world's population. The primary use for wheat is flour, but it is also used for brewing and distilling, and for making oil, gluten, straw for livestock bedding, livestock feed, hay or silage, newsprint, and other products.
Wheat futures and options are traded at the CME Group, the Mercado a Termino de Buenos Aires (MAT), Sydney Futures Exchange (SFE), London International Financial Futures and Options Exchange (LIFFE), Marche a Terme International de France (MATIF), Budapest Commodity Exchange (BCE), the Kansas City Board of Trade (KCBT), and the Minneapolis Grain Exchange (MGE). The CME's wheat futures contract calls for the delivery of soft red wheat (No. 1 and 2), hard red winter wheat (No. 1 and 2), dark northern spring wheat (No. 1 and 2), No.1 northern spring at 3 cents/bushel premium, or No. 2 northern spring at par.
Prices - CME wheat futures prices (Barchart.com electronic symbol ZW) retreated into Q2-2019 and posted a 2-year low of $4.1625 per bushel in April 2019. The outlook for record global output and abundant supplies was a bearish factor for wheat prices as the USDA projected global 2019/20 wheat production at a record 763.95 MMT and global 2019/20 wheat ending stocks at a record 288.03 MMT. Prices rallied sharply by over $1.35 a bushel into late June as heavy rain in the Great Plains delayed the U.S. winter wheat harvest. Also, a heatwave in Europe put stress on EU and Ukraine wheat crops. Wheat prices then tumbled over $1 per bushel into September 2019 as improved weather conditions boosted the outlook for wheat crops in Russia, the world's fourth-largest producer. SovEcon projected Russia 2019/20 wheat production of 82.2 MMT, the second-biggest wheat crop ever. Also, increased wheat production in the EU, the world's biggest wheat producer, weighed on wheat prices after the European Commission in September 2019 projected EU 2019/20 wheat production at a 4-year high of 142.7 MMT. Wheat prices then trended higher into year-end. The prospects for increased U.S. wheat purchases by China improved after the U.S. and China moved towards their phase-one trade deal agreement in December 2019. Wheat prices received a boost from increased demand for U.S. wheat late in 2019, which resulted in wheat prices rising to their high for 2019 of $5.6450 a bushel in December. The USDA reported U.S. wheat sales of more than 700,000 metric tons in the week ended December 19, which followed sales of 868,600 metric tons in the previous week, the largest figures in six years. The USDA projected that U.S. 2019/20 wheat exports would climb +2.5% to a 3-year high of 1.0 million bushels. Wheat prices finished 2019 up +11.0% yr/yr at $5.5875 per bushel.
Supply - World wheat production in the 2019/20 marketing year is forecasted to rise +4.5% yr/yr to 764.391 million metric tons, a new record high. The world's largest wheat producers in 2019/20 are expected to be the European Union with 20.1% of world production, China with 17.5%, India with 13.4%, Russia with 9.6%, and the U.S. with 6.8%. China's wheat production in 2019/20 is expected to rise +1.6% yr/yr to 133.590 million metric tons, but still down from the 2017/18 record high of 134.334. India's wheat production in 2019/20 is expected to rise by +2.3% yr/yr to a record high of 102.190 million metric tons. The world land area harvested with wheat in 2019/20 is expected to rise +1.4% yr/yr to 218.2 million hectares (1 hectare equals 10,000 square meters or 2.471 acres). World wheat yield in 2019/20 is expected to rise +3.3% yr/yr to 3.51 million metric tons, a new record high.
U.S. wheat production in 2019/20 is expected to rise by +1.9% yr/yr to 1.920 billion bushels, which would be below the record crop of 2.785 billion bushels seen in 1981/82. The U.S. winter wheat crop in 2019 rose by +10.1% yr/yr to 1.304 billion bushels, which was still well below the record winter wheat crop of 2.097 billion bushels seen in 1981. U.S. production of durum wheat in 2019 fell by -31.1% yr/yr to 53.756 million bushels. U.S. production of other spring wheat in 2019 fell -9.9% yr/yr to 562.380 million bushels. The largest U.S. producing states of winter wheat in 2019 were Kansas with 25.9% of U.S. production, Ohio with 16.5%, Washington with 9.1%, Oklahoma with 8.4%, Colorado with 7.5%, and Montana with 7.3%. U.S. farmers planted 45.158 million acres of wheat in 2019, which was down -5.6% yr/yr. U.S. wheat yield in 2019/20 is expected to be up by +8.6% yr/yr to 51.7 bushels per acre, remaining below the 2016/17 record high of 52.7 bushels per acre.
Demand - World wheat utilization in 2019/20 is forecasted to rise +2.8% yr/yr to 756.3 million metric tons, a new record high. U.S. consumption of wheat in 2019/20 is expected to rise +7.9% yr/yr to 1.198 billion bushels, which would be below the 2012/13 record high of 1.389 billion bushels. The wheat usage breakdown in 2019/20 is expected to be 80.1% for food, 11.2% for feed and residuals, and 5.7% for seed.
Trade - World trade in wheat in 2019/20 is expected to rise by +4.7% yr/yr to 180.89 million metric tons. U.S. exports of wheat in 2019/20 are expected to rise by +4.2% yr/yr to 975.0 million bushels but remain below the record high of 1.771 billion bushels seen in 1981/82. U.S. imports of wheat in 2019/20 are expected to be unchanged yr/yr at 135.0 million bushels, and remain below the 2013/14 record high of 172.5 million bushels.
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